SDF can now invest in single Saarc state
Aug 21, 2015
South Asian Finance Ministers on Thursday agreed on allowing the Saarc Development Fund (SDF) to invest in infrastructure projects in a single country, in an attempt to activate the infrastructure and economic windows under the SDF.
The meeting also agreed to increase the size of the SDF from existing $350 million.
According to the Saarc Charter, projects located in one or more Saarc member countries, of significant economic interest for three or more Saarc member states, are eligible for receiving SDF funding. “As it is difficult to find infrastructure projects that are operated in three countries or benefits three or more countries, the Saarc Finance Ministers agreed on adopting flexibility,” said Madhu Marasini, chief of international economic cooperation coordination division at the Finance Ministry.
During the 18th Saarc Summit held in Kathmandu last year, the leaders had agreed to open the SDF’s infrastructure and economic windows. Its social window is already operational.
The infrastructure window would cover projects in the areas of energy, power, transportation, telecommunications, environment, tourism and infrastructure, while the economic window would primarily look after non-infrastructure funding. The social window offers grant and technical assistance to member countries in their poverty alleviation and social efforts.
The meeting that concluded here on Thursday also decided that the existing funds with the SDF is very low to fund any big scale project. To increase the size, the Finance Ministers agreed to have credit rating of the fund conducted from the international rating agencies and appoint a fund manager, Marasini said. The Saarc nations also agreed to prepare a strategic plan on increasing the financial resources of the SDF.
According to Nepali officials, the ministers also agreed to expand SDF branches in other member countries from current Thimpu.
With the ministers agreeing to better utilize the existing mechanism, they also decided not to move ahead with the plan to establish the proposed Saarc Development Bank. India had proposed establishing such a bank last year, but a panel of expert formed by the Indian government termed it “infeasible” for now, according to the Indian media.
After conclusion of the meeting, Finance Minister Ram Sharan Mahat said the ministers agreed that time has still not come to open a regional development bank. “We agreed on first utilising the current windows under the SDF well,” he said.
As far as the currency swap agreement is concerned, the ministers agreed that an expert group from the Saarc states would first discuss the matter. Marasini said the expert group would analyse the macro-economic situation and viability of currency swap among the member nations before presenting the agenda to the next Saar Finance Minister’s meeting to be held in Pakistan in 2016.
Source: The Kathmandu Post
